Understanding Influencer Marketing Costs
Influencer marketing is a collaboration between a brand and a social media user (whether a micro-influencer, UGC creator, or mega-influencer) to promote a brand’s products or services. The goal could be driving product sales, promoting a product launch, driving brand awareness, generating leads, and much more.
So, what costs are associated with influencer marketing?
- Content fees (payments directly made to the influencer for creating sponsored content)
- Affiliate fees (commissions paid for sales driven, performance incentives, etc.)
- Gifted products (anything you send to an influencer for marketing purposes)
- Shoutouts (payments to be called out or tagged in an influencer’s content, stories, or feed)
Factors Affecting Influencer Marketing Prices
Prices for sponsored content and influencer marketing range wildly based on multiple factors:
- Engagement rate: There needs to be more than views to prompt subscribers or followers to take action. An engaged audience is much more valuable and likely to follow an influencer and their recommendations closely.
- Usage rights: Many influencers charge more if the contract states you have usage rights to their sponsored content. For example, the right to use a sponsored social media post on your website or in advertisements.
- Production needs: The more elaborate the content, the more you’ll pay. Think of extra costs associated with renting a studio, purchasing more expensive props or filming equipment, editing, etc.
- Exclusivity rights: Are you paying the influencer to stay exclusive with your brand? Many brands don’t want an influencer to advertise their competition’s products, so they pay more during an ongoing campaign with the influencer to have the influencer agree not to create content or sponsored content from similar brands.
- Follower count: The larger the influencer, the more expensive it’ll usually be to work with them. However, this attitude is shifting as more brands prioritize influencers with hyper-engaged, niche audiences.
Setting a Realistic Budget for Influencer Marketing
So, how can you set a realistic budget for influencer marketing campaigns?
Start by considering your brand’s marketing budget and goals. Are you interested in working with a few influencers or many? Are you thinking about ongoing campaign work or one-off posts?
Then, research average influencer marketing rates for influencers of this size, factoring in extra production costs if applicable.
Keep some wiggle room in your budget to experiment if you’re just starting with influencer marketing. Remember, quality influencer marketing campaigns are much better than a bunch of random, one-off campaigns that don’t align with an influencer’s audience, leaving you with poor ROI.
Maximizing ROI with Influencer Marketing
You want to make every dollar of your marketing budget count by maximizing ROI with influencer marketing efforts. Here’s our top tips:
- Be choosy. Don’t work with the first influencer that pops up when you search your niche on Instagram or TikTok. Do your research and look for influencers with target audiences and similar goals that align with your brand’s.
- Focus on engagement. A larger audience doesn’t guarantee better sales. An engaged audience is likelier to try products or services that an influencer recommends, especially if it’s a more niche topic.
- Vet influencers: Always verify that an influencer’s followers and reach are real. Unfortunately, some influencers buy followers and views, and these fake audiences won’t help your marketing efforts.
- Give the influencer creative control. Many influencers express a repeated sentiment: frustration with brands overly controlling sponsored content. Naturally, you want to set goals and some structure. But remember, the influencer knows their audience best! That’s why they have an engaged audience. Consumers are becoming increasingly aware of obvious ads, so let the influencer have some creative control over the sponsored content so they can make it seamless with their content and something their audience wants to watch.
Negotiating with Influencers for Better Pricing
After finding the best influencers for your project, get ready to negotiate a fair rate to maximize your marketing budget.
For starters, finding influencers aligned with your brand, goals, and interests is a great start because they’ll likely be more excited about the project and less likely to view you as just a means of making money if they believe in your product or service.
Otherwise, hiring an influencer for a one-off post is a great way to save money to weed out projects with poor ROI. If it’s successful, propose a contract with multiple months or content packages (i.e., an Instagram post, TikTok, and YouTube video) at a better rate. Many freelancers (which content creators are) are happy to earn a little less per post if it means they have guaranteed work for multiple months or even a year.
Other ideas are non-cash perks, first access to new products, bundling for better rates, or offering a flat rate plus a tiered affiliate commission structure (this encourages them to help increase sales more, too).
Measuring the Success of Your Influencer Marketing Campaign
Before signing a contract with an influencer, consider your brand’s biggest goals (brand awareness, sales, etc.) and how you plan to measure these KPIs.
Here are some of the most common and effective ways to measure the success of your influencer marketing campaign:
- Engagement metrics (likes, comments, shares, impressions, contest entries, audience response, etc.)
- Sales and conversion tracking (Sales driven and tracked through affiliate links and promo codes, website traffic driven through links, or downstream conversions from awareness-building)
- ROI calculations (is the campaign expense less than revenue driven? Is the campaign creating long-term brand lift?)
- Social media follower increases (Is your brand receiving more followers and engagement on your social media posts?)
These factors help you determine if each influencer campaign is worth the expense and brings in a more significant ROI that is worth the time and cost.
Tips for Cost-Effective Influencer Marketing
Lastly, let’s cover tips for cost-effective influencer marketing campaigns.
I recommend starting with nano and micro-influencers. Not only do these types of influencers usually have more engaged communities, but their rates are often much lower. Creating quality content with a small group of micro-influencers versus one mega-influencer can help you stretch your budget while achieving outstanding results.
Affiliate links are another way to save on sponsored content at flat rates. You may pay the influencer a more affordable flat rate but make the offer more enticing by pairing it with affiliate links to incentivize the influencer to drive more clicks or action. You’re also paying more for actual performance versus waiting and seeing what happens.
Lastly, repurpose evergreen content assets as much as possible. If you have usage rights, report top-performing content across different social media channels.